Advocates of government intervention in the economy often make their case by attacking "unrestrained" or "unbridled" competition. Is competition ever "unrestrained"? What were some of the important restraints on competition that operated in the U.S. economy in the 19th century when, according to some accounts, competition was "unrestrained"?

Much depends, of course, on how one defines "restrained" and "unrestrained." Competition is always restrained by laws against force, violence, fraud, deception, and breach of contract in the sense that even in the most laissez faire of business environments, no one can commit these things in the marketplace without government (appropriately, I might add) action through its prosecutors, courts and common law. But those bad things should not be ascribed to "competition" per se. They are evidence of bad behavior and lack of integrity, which are present in any environment. For instance, if one government bureaucracy lies or falsifies records so as to secure more government funding, we wouldn't say the bad behavior was due to "competition" for federal dollars. Bad behavior is bad behavior, and ought to be dealt with by the proper authorities and by basic law that punishes it and provides for injured parties to be compensated by the wrongdoer.

In the 19th century, when the economy was freer, supply and demand and market forces did not eliminate bad behavior but they did tend to discourage it, just as they do today. A company that mistreats its customers, cheats on its contracts, cuts corners on quality, or unduly raises prices, felt the sting of both competitive rivals and consumer reaction. A free economy means people can go elsewhere and poor performance will stimulate new competition to fill the void.

"In the 19th century, when the economy was freer, supply and demand and market forces did not eliminate bad behavior but they did tend to discourage it."